You set your rate by looking at what others charge, and you're busy every week. Yet at the end of the month, after software, the accountant and your own pay, there's almost nothing left.
In short: a rate has to cover three things: the costs of running the business, the pay you need, and a buffer for slow months and late clients. Add them up for a month and divide by the hours clients really pay for, not by every hour you work. Then check that each project's price beats your direct costs by a margin, not just a markup.
- Monthly running costs
- + Your pay
- + 10% buffer
- ÷ Hours clients pay for
- = Your floor rate
This is a general costing method, not financial or tax advice. Whether your pay figure includes personal tax and contributions depends on your business form; ask your accountant.
A worked example
Made-up but realistic: a solo designer with €800 a month of running costs (software, equipment, accountant, phone) who wants to pay themselves €3,000 a month, plus a 10% buffer. That's €4,180 a month to cover.
| Hours per month | Rate needed | |
|---|---|---|
| Every working hour billable | 160 | €26 |
| About 60% billable | 96 | €44 |
€44 an hour
Quotes, emails, invoicing, learning and finding the next client all take time nobody pays for. If you price as if every hour were billable, you'll charge €26 and need 160 paid hours that won't come. At about 60% billable, the floor is €44. It's a floor, not a price: what clients will pay for your work can be higher.
Markup is not margin
If a job has €1,000 of direct costs (a subcontractor, materials) and you add a 50% markup, the price is €1,500, and your margin is a third of the price, not half. To keep half the price, charge €2,000.
The steps
1. Add up three months of running costs
Software, equipment, accountant, insurance, phone, bank fees. Divide by three for a monthly figure.
2. Decide your monthly pay
The amount the household needs from the business each month (split every payment).
3. Add a buffer
10% covers slow months, late payments and price increases. Some people use more.
4. Count the hours clients really pay for
Track two normal weeks: billable hours vs everything else. Many solo businesses land somewhere around half to two thirds; use your own number.
5. Divide, and round up
That's the floor. Quote above it, and don't go below it to win a job.
6. Check it every quarter
Costs rise, and so should the floor. Compare what you actually earned per hour with your floor (monthly review).
The traps
- Copying a competitor's rate. Their costs and hours aren't yours. Know your floor first.
- Discounting without a trade. If the price goes down, ask for something back: a deposit, faster payment, a smaller scope.
- Forgetting fees and tax. Payment fees and tax have to come from somewhere; the split rule takes care of tax, the running costs of fees.
- Never raising prices. Your costs rise every year. Try a small increase on new proposals and watch what happens.
Try your own numbers
Write down your monthly running costs, your monthly pay and your billable hours. (Costs + pay) × 1.1 ÷ hours is your floor. Then compare it with what you charge today.
One thing to do today
Look at your last three invoices and divide each one by the hours it really took, including the emails and revisions. Compare the result with your floor.
Where Volora fits
In Volora, a Business project with categories for running costs shows what the business really costs each month, with budgets and budget alerts when a category creeps up. Client payments land in a business wallet, and your pay is a transfer to your personal wallet, so you can see whether the rate is actually paying you. Working out the rate is still up to you; Volora shows the numbers that go into it.